Walmart Strategy Analysis

Walmart is an international retailer that has ventured in different markets, mainly developed and emerging. The company is the largest retailer in the world with a global revenue of US $485.7 billion in their 2015 financial year. The sales in the United States comprised of 60 percent of its revenue. It has a market capitalization of US $194 billion. However, it is believed that it has a potential of increasing its foreign revenue. The retailer started expanding into the foreign markets in 1991 in Mexico and later increased its reach in more than 30 nations (Alcacer, 2017). It expanded through a combination of acquisitions, joint ventures, and organic growth. In some markets, it achieved success such as Canada, United Kingdom, and Mexico, whereas it struggled in Brazil and China, and exited from the South Korean and Chinese markets. Approximately 85 percent of the company’s sales were derived from the United States’, Mexican, and the United Kingdom’s markets (Alcacer, 2017).

When entering the Mexican market where it has been so successful, it started by opening Sam’s Club in 1991 via a joint venture with Cifra (Alcacer, 2017). The retailer has obtained the majority stake in Cifra by 1997 and changed its name to Walmart de Mexico (WALMEX). The strategy in Mexico was to adopt the Everyday Low Prices (EDLP) method with a consistent concentration on operational efficiency and convenience. The customers were attracted to the retailer’s well-stocked aisles, lit interiors, and the low prices. Moreover, Walmart operations were boosted by the regulations of North American Free Trade (NAFTA) which opened up the Mexican economy hence it was able to sell goods cheaper compared to the local stores. The cheap labor in Mexico reduced its operational income. It also partnered with local logistics companies to facilitate the management of the supply chain.

In Canada, Walmart entered the market via the acquisition of 120 stores from Woolworth in January 1994 (Alcacer, 2017). The store attracted more customers through a thorough advertising campaign in local newspapers and selling a variety of goods and focused more on grocery sales to overtake other rivals. In Brazil, the store failed since it adapted slowly to the tastes of Brazilians. They sold goods that were only suitable to the American suburbanites. In China, the regulations state that foreign retailers should formulate joint ventures with local business to operate in the nation. Therefore, Walmart had to partner with the local businesses or buy a stake in the local retail stores. The company tried to target the upper-middle-class, and the strategy flopped hence it decided to target the lower social, economic class by offering low-cost goods that appealed to them. However, it has received more challenges from the Chinese government that had closed their 13 stores for labeling ordinary pork as organic. It also faced stiff competition from other huge retailers such as Metro, Carrefour, and Tesco (Alcacer, 2017). Entering the Indian market via a joint venture rendered it disadvantageous for the company. However, the company thought that acquiring a joint venture with a local partner will help it understand the market better yet it was the same mistake applied in Germany. The national variations and the problems of operating together were the main factors. However, in the period during the partnership, the company understood the Indian market and can venture on its own. Therefore, it was not an absolute disaster after all.

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